Total nonfarm payroll employment increased by 428,000 in April, led by gains in leisure, hospitality, and manufacturing.
The Dow fell further, and the S&P is down, with a tech stock leading losses amid fears of an early recession. Today’s top headline comes two days after the Federal Reserve increased its interest rates by 50 basis points. The Bureau of Labor Statistics released a strong and positive labor market report, yet the stock market remains below zero level of sentiment.
The April unemployment rate remains the same as the March rate at 3.6%, according to April payroll and wage growth reports. The nonfarm payrolls rose positively this month, beating experts’ forecasts by 391.000 to 428.000 in April.
According to the Bureau of Labor Statistics, this was a strong indicator of a fast labor market recovery. The high increases in April’s job positions were taken as a positive or a bullish read, especially after this week’s interest hike by the FED.
In April, the number of long-term unemployed was 326,000 higher than the February 2020 number, at 1.5 million jobless. As for the number of permanently jobless workers, they remain at 1.4 million unemployed.
Yet strong indicators and data support the idea that most job losses were due to inflation effects of COVID’s long-term impacts. In April, the number of people who lost their jobs because their employers went bankrupt or closed was 1.7 million.
The job growth was widespread and was led by gains in the leisure and hospitality sectors, due to increased sentiment among workers. Neither in April nor in May did manufacturing, transpiration, or warehouse activities increase, which shows signs of recovery or at least signs of not falling.
The White House has been working closely to solve labor shortage problems for the past 6 months, which includes increasing work productivity. The Federal Reserve is still committed to fighting inflation by increasing its interest rates, aggressively if needed. By all means, that’s how the FED chairman thinks inflation must be dragged down.
Adding more jobs is one of them, as it will at the very least result in a positive fiscal impact and an increase in productivity. In the first quarter of 2022, the U.S. productivity rate decreased by 7.5%, which was a slap to the American economy, especially when investors and traders were hoping to see more gains in the tech and manufacturing sectors.
The S&P 500 is down 12% this year, the Nasdaq is down more than 10%, and this week’s losses make it difficult for the Dow to recover.
Till today, consumers were able to keep up with these hot prices due to prices in their salaries. For example, the average hourly earnings in the private sector rose by 0.4% to $27.12. However, other indicators of relevant surveys and studies found far more serious problems.
The U.S economy will last like this only for a short time, it will take some sort of a miracle to have a full recovery. One factor is the central banks, rising interest rate has certain advantages but a lot of disadvantages. Investors are selling their shares for fear of getting into correction territory. On top of that tech, stock considers under pressure due to concerns of more interest hikes on a 40 bp rate. This will make tech stock top look less appealing to investors and more losses for shareholders.